Loughborough University
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Joint ventures in the UK construction industry : a critical examination of the determinants of success and failure

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posted on 2012-12-11, 14:16 authored by Adrian C. Smith
The joint venture, is a management strategy that is easily misidentified and so in turn mis-used, thereby considered a panacea for many situations and circumstances both within the construction and other market industries. As a strategy vehicle, the joint venture can be used as a means to mitigate or obviate the risk associated with a company's or organisation's particular objective or need(s). The joint venture is best defined as a legally separate corporate entity formed by a number of parent-companies with the sole purpose of achieving a common set of objectives with shared ownership and control, utilising both the strengths and weaknesses, for either a definite or indefinite period of time. The formation of the joint venture arises out of the need for another, in a given situation where the potential venturer cannot alone achieve their given objectives(s). This primarily revolves around the need to share risk and utilise the skills, knowledge and resources if a potential partner. Principal reasons are to minimise the risk associated with the rising complexities of modern advancement and technology, to expand one's market geographically, to combine specialist abilities and so collaborate competitively. The correct use of the joint venture strategy in turn necessitated the need to fully comprehend the true nature of the joint venture, specifically with regard to the UK construction industry, and interpret the necessary and critical criteria for success. A clear understanding of the overall joint venture concept was necessary to allow an organisation to predict the determinants of success. The main objectives of this research therefore were to develop an understanding of the conceptual joint venture, and subsequently it's practical implications within the construction industry. A clear and concise formulation of the elements of success was established from an in-depth survey of national contractors within the UK construction industry. The hypotheses tested within the scope of the research revolved around the need for common control and shared ownership, a mutuality of aims and objectives, co-operation and collaboration amongst the partner companies and their respective personnel. A compatibility of partner size and joint venture experience, with an inherent flexibility for adapting to changes and the understanding oftheir respective organisational cultures were also considered within the research. The survey of contractors, and resultant analysis stemmed from the use of an indepth questionnaire detailing and testing the given hypotheses. With the use of the statistical mathematical tool, S.P.S.S, the results and analysis confirmed the following points. The prospective joint venturer must become familiar with and so understand their partners goals and objectives, assessing their willingness to contribute to the ventures success, with a full commitment of resources. There must be an attempt to provide a compatibility of cultures, partner size and experience, with a provision for shared ownership and joint control. The partner companies further need to provide a strong joint venture board, with the due autonomy and freedom to achieve the ventures main objectives. Use of a strong project manager, through which the control and feedback of information is passed is essential. There needs to be a great degree of trust produced amongst the partners with the sharing of information with free access to all. Without these aforementioned components of success, a potential joint venturer may endanger the potential for a successful project.



  • Architecture, Building and Civil Engineering


© Adrian Charles Smith

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A Master's Thesis submitted in partial fulfilment of the requirements for the award of Master of Philosophy of Loughborough University.


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